The
accounting and consulting firms of Smith Elliott Kearns & Company, LLC and
Robert M. Snyder and Associates, Certified Public Accountants, will merge
their firms on January 1, 2008, SEK&Co member Scot E. Orndorff, CPA and Robert
M. Snyder, CPA, announced recently.
We are very excited to welcome Bob, Demaree and their
staff to SEK&Co," Orndorff said. "They bring over 30 years of experience with
specialties in tax and small business consulting to our firm, as well as a
commitment to providing superior client service to clients in the Chambersburg
and surrounding areas," Orndorff added.
"Joining Smith Elliott Kearns & Company will provide our clients with a
continuation of what they have always expected – professional accounting and
consulting advice based on their individual needs. In addition, they will have
access to a broader base of expertise in the traditional services of auditing,
accounting, and taxes," said Snyder.
Snyder founded Robert M. Snyder and Associates in 1976 and quickly
established it as a firm known for expertise in the tax and business
consulting fields. Robert Snyder, CPA, Demaree Deardorff, CPA, Todd Bard, CPA,
and Roxanne Crist will join SEK&Co and begin working in the firm’s
Chambersburg office at 804 Wayne Avenue on January 1, 2008.
Smith Elliott Kearns & Company, LLC began in 1963 and grew
rapidly by providing quality service to businesses and individuals in the
Shenandoah and Cumberland Valleys. SEK&Co is a regional certified public
accounting firm with offices in Chambersburg, Carlisle, and Hanover,
Pennsylvania and Hagerstown, Maryland. The management and direction of Smith
Elliott Kearns & Company, LLC firmly rests with the 19 members who locally
provide leadership and service in each practice area.
Smith Elliott Kearns & Company professionals are recognized for their
expertise in the traditional accounting, auditing and tax functions. They have
also established a reputation in more specialized areas such as business
valuations, employee benefit planning and administration, estate planning and
administration, and small business consulting. Their professionals provide
industry-specific services to local governments, nonprofit organizations,
financial institutions, and healthcare professionals.
The combined firm will employ over 125 members and professional staff and
will operate under the name of Smith Elliott Kearns & Company, LLC.
These final regulations are generally applicable to taxable years beginning
after December 31, 2008. Here are some highlights of the new legislation.
Complying with the new rules will require some changes on the part of
employers, some of which will be complex. This article only touches on the
highlights of the new 403(b) regulations. There are additional provisions that
may affect your organization’s plan. We are available to assist you with the
implementation of the new regulations in relation to your plan, just give us a
call.
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Attention Nonprofit
Organizations!
Beginning
in 2008, small tax-exempt organizations that previously were not required to
file an information return may be required to file an annual electronic
notice, Form 990-N (e-Postcard) with the IRS. This new filing requirement
comes from the enactment of the Pension Protection Act of 2006 (PPA) and
applies to tax periods beginning after December 31, 2006.
you are a tax-exempt organization that normally has annual gross receipts
of $25,000 or less and does not have to file Form 990 or 990-EZ, you must file
the e-Postcard annually. The electronic notice is due by the 15th day of the
fifth month after the close of the tax period.
The notice will require the organization to provide the following
information:
d
Organization’s legal name,
d
Any other names the organization uses,
d
Organization’s mailing address,
d
Organization’s website address (if applicable),
d
Organization’s employer identification number (EIN),
d
Name and address of a principal officer of the
organization,
d
Organization’s annual tax period,
d
Verification that the organization’s annual gross
receipts are still normally $25,000 or less, and
d
Indicate if the organization has terminated operations.
Organizations that do not file the e-Postcard, or
information return Form 990 or Form 990-EZ for three consecutive years, may
have their tax-exempt status revoked as of the filing due date of the third
year.
The IRS, through its e-Postcard initiative, is developing an
electronic filing system (there will be no paper form) for the e-Postcard and
will be publicizing filing procedures when the system is completed and ready
for use. For the latest information regarding the filing system, you can visit
the IRS website at www.irs.gov/eo.us
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Sweeping Changes to
Maryland Tax Laws
As a result of
a special legislative session called by Maryland Governor Martin O’Malley, the
Tax Reform Act of 2007 was signed into law on November 19, 2007. This new tax
legislation contains numerous changes to Maryland tax law. The following are
some of the highlights:
1. Effective January 3, 2008, the sales and use tax rate
changes from 5% to 6%.
2. Taxable services have been revised under the sales and
use tax law effective July 1, 2008, to add the phrase "computer services,"
which include:
- computer facilities management and operation
- custom computer programming
- computer system planning and design that integrates
computer hardware, software and communication technologies
- computer disaster recovery
- data processing, storage and recovery
- hardware or software installation, maintenance and
repair
Computer services do not include internet access, typing
or data entry on word processing equipment, computer training, and certain
other limited services.
3. Effective January 3, 2008, the credit available to
vendors who collect and remit sales and use tax in a timely manner may not
exceed $500 for each return.
4. For tax years beginning after December 31, 2007, the
corporate income tax rate increases from 7% to 8.25%.
5. Starting January 1, 2008, the individual state income
tax rates will increase as a result of three new income tax brackets. The
current state income tax rate is 4.75%. The new brackets will increase the
rate to as high as 5.50%, based on the following:
- a 5.00% rate will apply to individuals with taxable
income of $150,001 to $300,000, and to couples with taxable income of
$200,001 to $350,000.
- a 5.25% rate will apply to individuals with taxable
income of $300,001 to $500,000, and to couples with a taxable income of
$350,001 to $500,000.
- a 5.50% rate will apply to anyone with taxable income
over $500,000.
As the new tax law contains other provisions too numerous to
list here, please do not hesitate to contact our office if you have any
questions or concerns. We will be glad to discuss how the new tax law will
impact you.
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Help Us Serve You
Better
We
appreciate your business and the confidence you place in our firm. We are
continually striving not only to exceed your current expectations, but also to
be proactive in response to your future service needs. We believe you can
provide us with the most pertinent perspective on how we are meeting your
expectations and the quality of our service.
We invite you to take 5 minutes to complete our client
survey on our website at www.sek.com to tell us how we’re doing.
Your input and comments are very important to us and will assist us in
responding to your current and future needs.
An important note.
This survey is by no means
the only way you can provide feedback. You can call or e-mail our staff at any
time with questions, comments, or concerns. By staying in close contact, we
can further our understanding of your needs and continue to assist you in
meeting them.
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Tax Burden Higher
on Upper Incomers
Upper-incomers
are bearing even more of the income tax load, the highest burden since the
1986 Tax Reform Act passed, the IRS says. It just analyzed data from 2005
returns, the most recent year available.
The top 1% of filers paid 39.4% of all income taxes, up from
36.9% the year before. Yet they had just 21% of total adjusted gross income.
The minimum AGI needed to be in the top 1% rose to a new high - $364,000.
The top 5% paid 59.7% of total income tax and made 36% of
all AGI. They each had incomes of $145,300 or more. And the top 10% of all
filers, those with AGIs of at least $103,900, bore 70% of the income tax
burden while tallying a little more than 46% of total adjusted gross income.
The bottom 50% of filers paid just 3.!% of total income tax.
Their share is so low because payroll taxes aren't included in the figures and
because many of them receive tax relief from the earned income credi
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The Better Way
Several years ago, Hi Bracket retired to
the south to enjoy his golden years. He felt financially secure in his
retirement since he had rolled all of his retirement funds into an IRA and
invested very conservatively. However, as time passed, his fixed income
started to lose ground with his life style. So, every little bit would
help.
Since most of Hi's income was IRA withdrawals and Social
Security (85% taxable at his level) he found himself in a position to make
quarterly estimated tax payments. Guess what! To get the money for the
quarterly payments, he had to withdraw it from his IRA which raised his
income, increased his tax and reduced the amount he had earning tax deferred
income. Doesn't seem fair, does it?
The Better Way would be to not make quarterly
estimated payments and leave the tax money on deposit earning income. To cover
taxes, calculate the amount owed on his total annual income (including his tax
liability), make a single withdrawal late in the year for taxes but have it
all withheld by the IRA custodian and paid in to the government.
Withholding is considered to have been paid evenly during
the year for estimated penalty calculation purposes, so quarterly payments are
not necessary. This approach may have some pitfalls if there is significant
non IRA income being counted - but - every little bit helps.
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Employers Need Revised Form I-9
On
November 7, 2007, the United States and Citizenship Service released a
revised Form I-9, Employment Eligibility Verification. It is a federal
requirement that US employers complete an I-9 form for all employees
within the first three days of employment, and retain the form for one
year after termination of employment or three years, whichever is longer.
This revision seeks to achieve full compliance with the
document reduction requirements of the Illegal Immigration Reform and
Immigrant Responsibility Act of 1996.
The revised list of acceptable documents applies to both
initial hires and reverification of existing employees. Employers are not
required to complete the new Form I-9 for existing employees unless and until
the employees are subject to reverification.
The new I-9 Form states that employers should use the new
I-9 Form starting immediately although employers will be afforded a period of
time to transition to the new form. The Department of Homeland Security will
not apply fines and penalties for use of a prior edition of the Form I-9 until
30 days after notice is published in the Federal Register.
A PDF copy of the form is available on our website at
www.sek.com. Look for Human Resources Consulting under the Services tab.
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